Making sense of the wilderness called politics when what is said is not necessarily what is meant.

Tuesday, July 15, 2008

Fuel debate Anwar vs Shabery

How did everyone rate the minister vs the former deputy prime minister of Malaysia? The debate started off solid with DSAI harping the same tune of promising the rakyat that the PR would decrease fuel price by 50 cents per L if they rule the country. He would also squeeze additional funds from the subsidies the IPPs enjoy from gas usage for power generation, claiming that TNB has an over capacity of power generation. Dato' Shabery started with claiming PR using the populist stand (why did PR change their subsidy amount? before the debate, they claimed that they're able to reduce it back to RM1.92, now it's RM2.20). When money is allocated for subsidies, the market is distorted and we deprive allocation for other essentials. During the oil embargo by the Arabs following the Yum Kippur war, Tun Razak, the then PM, established Petronas (together with Ku Li as Chairman) to participate in the oil business as to reduce the dependence of foreign oil. The comparison of other oil exporting countries and its income per capita and inflation rates were also discussed briefly. DSAI argued that too many bail outs by the Government occurred that had siphoned off the royalty money and dividends paid by Petronas to the Government (wasn't he Finance Minister involved in several bail outs himself?).

At this juncture, both diverted from fuel debate and talked about demonstrations, and other non-issues. Both did not answer the questions, i.e. when asked about the Tabung Warisan, Anwar talked about governance, transparency and the need to curb corruption. Shabery blamed DSAI for being part of the problem when he was TPM and FM. Shabery claimed that the debate is proof that the government today is more open, not in comparison to the government when DSAI was TPM (is Shabery also indirectly blaming TDM? Perhaps people weren't so keen of debates back then, that was before the youtube and facebook generation). Shabery also claimed that the greatness of Petronas is proof of the greatness of UMNO and the BN government (I dont think this would run well with TSH). That's when I changed channel, played with my 4-yr old. No air, no air.

1.High oil price increases government subsidies, leading to inefficient dispersion of wealth. Subsidies are better served to the people by channeling it via development, rather than lining the foreign company coffers.

2.Low oil price reduces government subsidies, and subsidies allows efficient dispersion of wealth. Subsidies are better served to go directly to the coffers of foreign companies, rather than channeled via development.

If argument 2 is not true, than argument 1 cannot hold water. Subsidies' effect should be constant to the economy, good or bad, regardless of oil price.

Also, the definition of a 'populist' is 'a supporter of the rights and power of the people'. So, as a democratic leader, it is essential to be a populist.

Unfortunately, our esteemed English speaking leaders seem to confuse the term 'populist' with 'popularist' which brings a negative connotation to whoever the term is referring to.

Gentlemen, High fuel price means high profit for Petronas. Have you not been listening to the debate.

My oppinion is that Anwar was repeating himself but did not give any true action plan or blue print or guide on how to actually acheive the fuel price reduction he promised before the elections.

Anwar was surprised when it was mentioned that only a small part of the profit came from local oil the rest is from investments overseas. He did not know which means he did not do research he just promise the sky for people to vote him.

Economics is not that simple: There exist taxation (income for gov), expenditure (expenses for gov - ex for infrastructure), export and import levy, not to mention velocity of money etc etc. Its not that simple.

But Anwar did mention that he was willing to debate about the 1987 financial crises with any economist saying that the IMF was a good way to go. So when will the debate be. Please oh please.